CHAPTER 13

Building a Twenty-first-Century Economy of Life, Liberty, and Happiness

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

—PREAMBLE OF THE U.S. CONSTITUTION

Congratulations! You’ve made it to chapter 13! It’s been a long and bumpy ride—to the edge of a cliff: Americans fought and rejected laissez-faire economic policy a century ago, and there is a concerted effort to bring it back. The New Deal accomplished huge strides, securing a better quality of life, greater fairness, and the world’s largest middle class, all under attack by the let-the-market-rule policies pursued over the last three decades, culminating in economic decline. Growing environmental threats, such as peak oil and climate change, are forcing an economic transition in any event. From happiness to debt, Americans now face the most significant economic challenges in generations. Yet we haven’t bothered to ask ourselves what the economy is really for.

There is a ready status quo answer. You need to:

• Work harder at a job you don’t like, for lower wages and less vacation.

• Be more competitive with people who earn a dollar a day.

• Glug down more caffeinated, alcoholic, or sugary drinks, and save time by washing down TV-advertised antidepressants in the same gulp.

• Tough out sickness and go to work anyway.

• Stuff the kids and grandparents in 24/7 day care.

• Mortgage your life to pay for education and housing.

• Substitute TV, video games, and trash-the-planet (and your body) consumption (charged to the hilt on credit cards) for the family and friends you just don’t have time for, because you’re too busy working and maintaining your mountain of stuff.

• Forget retirement.

• Focus on helping corporations earn new record profits while just hoping Wall Street doesn’t nuke the economy again.

• Understand that no one ever said the economy was here to make you happy.

That’s the new American Dream, according to pudgy pundits and bailed-out CEOs.

But most Americans we talk to don’t agree with that worldview. They, and we, think it’s time to share some of the corporate wealth and time savings generated by higher worker productivity with the workers who generate it. What a concept!

We live in a remarkable time in human history. We don’t have to chase woolly mammoths, make our own clothes, or live in fear of Viking raiders. Today’s Vikings are friendly, relaxed, well-vacationed people—the happiest folks on the planet, actually. Life has really changed. A century ago, the American Dream was “a chicken in every pot.” When many Americans were hungry, it made sense to measure how many more chickens were sold to know if we really were better off. Today, there is growing hunger in America, but more of us are overfed and we are starving for time. America once led the world with the shortest working hours, most free time, and highest labor productivity. Making some of us work sixty-five hours a week despite high unemployment just doesn’t make sense.

Our quality of life, and that of our children, grandchildren, and great-grandchildren, really does depend on what kind of economy we build. We’ve had enough of work more, enjoy less, pollute more, eat toxics, get cancer, and increase the GDP. How about we work less, enjoy more, have more friends and time for them, consume less, pollute less, destroy less, owe less, live better, longer, and more meaningfully? Sounds positively revolutionary, doesn’t it?

We need a twenty-first-century economy that provides the greatest good for the greatest number over the longest run. Americans can have more free time, more time for family and friends; infants can have more time with their parents. Getting that time will take individual change. As U.S. history shows, it will also require changing national policy. Freedom cannot be advanced by working more hours, borrowing more, and consuming more empty products. Spending more time as active citizens building a nation would be revolutionary.

The solutions to our economic problems exist. There’s not enough room in this chapter for even a condensed version of an Encyclopedia of Solutions, though you can read Solutions Journal (www.thesolutionsjournal.com). But we’re going to offer a few big ideas we think could make a world of difference.

An Economic Bill of Rights

Addressing a nation at war and still recovering from the Great Depression, President Franklin Roosevelt stated most clearly the economic goals of his administration and the New Deal on January 11, 1944.1

It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.

This Republic had its beginning, and grew to its present strength, under the protection of certain inalienable political rights—among them the right of free speech, free press, free worship, trial by jury, freedom from unreasonable searches and seizures. They were our rights to life and liberty.

As our nation has grown in size and stature, however—as our industrial economy expanded—these political rights proved inadequate to assure us equality in the pursuit of happiness [emphasis ours].

We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. “Necessitous men are not free men.” People who are hungry and out of a job are the stuff of which dictatorships are made.

In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all—regardless of station, race, or creed.

Among these [rights] are:

• The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;

• The right to earn enough to provide adequate food and clothing and recreation;

• The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;

• The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;

• The right of every family to a decent home;

• The right to adequate medical care and the opportunity to achieve and enjoy good health;

• The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;

• The right to a good education.

All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being [emphasis ours].

Roosevelt spoke of a standard of living higher than ever before. Of course, 1944 was an earlier time when greater access to material things was essential for many millions of Americans. Roosevelt did not include “The right to a clean, safe, and accessible natural environment.” We have every reason to believe he would if speaking today. And that he might have spoken of a “quality of life higher than ever before.” But in the end, he spoke, as Jefferson had, of “happiness” and well-being. He did not suggest that our goal was growth or a higher GDP. He said they were new goals of “human happiness and well-being.”

These are still the right goals, the goals we should be striving for today and tomorrow. To achieve them, we suggest a holistic pattern of policy changes. They are not exhaustive, and they are only meant to be suggestions. But we think it’s necessary to propose some first steps in an effort to rethink our economy so it can give all of us what we need in this new era.

You might think of our ideas as an economy of life, liberty, and happiness. Some of what follows includes the very ideas our founding fathers and Roosevelt spoke of, unfinished business that, after massive increases in our national wealth, remains to be won. But some of them are new and could not have been imagined earlier in our history. So here we go …

  1.  Give us time

a. Mandate three weeks of paid vacation time for every working American, prorate for part-timers.

b. Implement work-sharing systems, such as Kurzarbeit, to reduce unemployment without increasing working hours.

c. Require hourly pay parity and prorated benefits for part-time workers, as in Europe.

d. Ensure the right of workers to reduce their hours without losing their jobs, hourly pay, promotion opportunities, or health care, as in the Netherlands. Other benefits would be prorated.

e. Ban compulsory overtime and provide double-time pay for overtime, as in Finland.

f. Make federal holidays mandatory for all workers, or give greater compensation to those who must work on those holidays.

g. Provide tax credits and other incentives to allow small businesses to make these changes without suffering financially.

  2.  Improve life possibilities from birth

a. Provide prenatal and other care to all parents-to-be.

b. Give six months of mandatory paid parental leave when a child is born, at a minimum of half the current salary levels, to be paid for by government, as in Canada, through small graduated payroll deductions rather than directly by the employer.

  3.  Build a healthy nation

a. Provide basic single-payer health care for all Americans, with private insurance providing additional coverage, as in Canada.

b. Offer tax incentives for healthy behavior, while raising taxes on unhealthy foods and activities.

c. Carefully shift subsidies to encourage local, organic, and sustainable food production and away from unhealthy food and unsustainable agriculture.

d. Ensure physical education classes for students.

e. Protect children by banning television advertising aimed at those under twelve, as in Sweden and Quebec.

  4.  Enlarge the middle class

a. Create a more progressive tax structure with fewer loopholes for the wealthy and corporations. (General Electric paid zero taxes on a profit of $14 billion in 2010.)

b. Establish a national living wage with variations for cost-of-living in different states and cities.

c. Restore limits on usury—restrict interest charged on loans to a certain percentage above the rate of inflation.

d. Provide greater government support to reduce the cost of education and make college tuition easily affordable.

e. Give more generous benefits to those losing employment while retaining business flexibility, as in Denmark.

f. Strengthen the Social Security system by ending the income limit for taxation and tax breaks for private pension programs, while increasing benefit levels to the European average.

  5.  Value natural capital

a. Change accounting rules and economic analysis to bring the value of natural capital into government and corporate investment decisions.

b. Adopt physical sustainability measures to inform decision making for air, water, land, and climate resources.

c. Set aside and restore sufficient natural lands for ecosystem services.

d. Use tools to identify, value, map, and model ecosystem services for land use planning and environmental impact statements, and create regional watershed investment districts to more efficiently invest in restoring natural systems and coordinate investment for potable water, flood protection, storm water, biodiversity, ports, navigation, and other water-related investments.

e. Reestablish the Civilian Conservation Corps to restore natural capital and our environmental commons and provide a portion of public works jobs.

  6.  Fix taxes and subsidies

a. Increase the marginal income tax rate to 45 percent for the highest tax bracket.

b. Make work pay by ensuring that money made from money (e.g., capital gains) is taxed at a rate at least as high as that made from employment.

c. Use the tax system to correct market distortions, with new taxes on “bads,” which inflict externalized costs on individuals, communities, or the environment, and by removing taxes on “goods” with positive social benefits.

d. Remove subsidies for consumers and producers of nonrenewable resources and move these subsidies to renewable and nonpolluting or non-climate-changing industries.

  7.  Strengthen the financial system

a. Reregulate the financial sector (and enforce those regulations).

b. Implement financial and currency transaction taxes to shift money from risky speculation into productive investment.

c. Restore the separation between savings and loans, commercial banks, and investment banks.

d. Break up the largest banks and investment firms to achieve greater competition and provide public savings institutions at the state or local level—a public banking option.

  8.  Build a new energy infrastructure

a. Ramp up $1 trillion in public and private investments shifting to local, low-carbon, renewable energy and off fossil fuels, funded by a carbon tax.

b. Aggressively promote energy efficiency in policy and low-interest financing to improve existing and new infrastructure and products.

c. Utilize lower-grade energy (e.g., cooling steam from a data center to warm greenhouses or provide district heating).

  9.  Strengthen community and improve mobility

a. Tax sprawl (which requires the extension of public services) and excessive home sizes, while incentivizing green building, small homes, public transportation, and pedestrian/bicycle infrastructure.

b. Fund a modern railway system and increase the cost of driving autos to pay for it. Deprioritize road construction.

c. Electrify our transportation system with electric buses, trains, and other vehicles.

10.  Improve governance

a. Ban corporate campaign contributions through an amendment to the U.S. Constitution. Limit television advertising in campaigns.

b. Require corporations to include codetermination policies, with at least one third of directors elected by the workers.

Good Governance

Democratic, transparent governance is essential to healthy and happy societies. Economic progress in the United States has often followed on the heels of improved governance. Markets cannot function without trust, regulations, and the enforcement that brings cheaters to justice. Effective competition requires a level playing field and a strong set of rules. If you doubt this, think of what would happen in a football game if one team were allowed to come out with brass knuckles and there were no penalties. Such games would be woefully one-sided, and spectators would quickly lose interest. Setting and enforcing rules for markets, human health, ecological sustainability, and other important goals are necessary to ensure the greatest good for the greatest number over the longest run. This is the role of government. And because the economy is never static, governance must change and adapt lest new threats weaken the economy.

At times in American history, the Supreme Court, with its justices appointed for life, has made harmful decisions favoring the rich and powerful. The Court supported slavery in the Dred Scott decision. It supported monopolies until 1911. It struck down attempts to regulate child labor until 1938, and ruled in favor of the internment of Japanese Americans and legal segregation. The present Supreme Court has done it again, deciding in the Citizens United case (and by the slimmest 5–4 majority) that there should be no limits to corporate contributions during elections.2 Perhaps the most important and urgent priority for improving governance is passing an amendment to the Constitution sharply limiting corporate spending in election campaigns.

Limit the State and the Market

Subsidiarity is the idea that the level of government closest to the people and sufficiently effective in scale should set economic rules for the market. In other words, the activities of local businesses should be overseen by local governments, while large corporations need a larger government watchdog in the service of the people. This seems like a reasonable idea to us. This is not the same as saying “the smaller the government, the better.” There is no question that, in the United States, at least, pollsters find more confidence in local government than in the state or federal governments, although in many times and cases this has not been true. (For example, blacks in the Jim Crow South had little reason to trust local officials, some of whom put on white sheets while not in office. The federal government, however, was required to deliver equality and to protect African Americans from retribution and intimidation.) Subsidiarity still works. Americans are far more able, generally, to effectively exert their influence on decision making at the local level than in Washington, D.C. The more decisions that can be effectively made in this way, the better.

Conservatives fear the rise of a larger and, ultimately, all-powerful state, or mega state. (Much of the attack on President Obama is based on the idea that he is trying to create such an all-powerful federal government.) But, as the economist Stefano Bartolini points out in his powerful Italian bestseller Manifesto for Happiness, the rise of the megastate is a response to the rise of the megamarket.3 A market invading all aspects of life for purposes of private profit and composed of monolithic corporations requires a powerful vigilant regulator. Otherwise Wall Street, the phone companies, or credit card firms steal us blind. Bartolini’s case (mirroring the billionaire George Soros’s words: “We want a market economy, but not a market society”) supports our call for a different kind of economy.

In less regulated capitalist economies, like the United States, the market tends to expand into all areas of life—everything becomes for sale. Commercial messages increasingly litter the visual and auditory world. The average American now sees more than one thousand advertising messages every day.4 Even conservative economists worry about this assault on beauty by commercialism and huckstering, warning that the market would destroy itself by entering all areas of life—that is, by putting everything up for sale.

Limiting the market’s reach is hardly a new idea. The story of Jesus throwing the moneychangers out of the temple was recorded in all four gospels. Jesus expelled the market from the temple not because he universally opposed trade and commerce, but because the temple was a place for spiritual relationships and activities, separate from market activities. The moneychangers degraded “the house of prayer” into a “den of thieves.”

“Money talks,” goes the old adage, and if allowed, the market crowds out activities that cannot be bought and sold. Goods once commonly provided either by friends, neighbors, or family, or as ecosystem services from the environmental commons, are displaced and increasingly must be purchased. Groundwater is poisoned or depleted and demonstrably more expensive, and lower-quality bottled water is sold. As parents and grandparents must work to make ends meet, week-old infants are sent to day care, expanding the market but providing lower-quality care, lower educational achievement, greater crime, less enjoyment, reduced family cohesion, and requiring increased regulation of day care. How many Americans would rather work than have paid leave to care for their new infants? It does not “cost too much”; other countries have proven the policy successful.

Work more, hurry more, worry more, bond less with others, grow more lonely, and buy your escape from loneliness with more work and more “growth.” No wonder economics has been called the dismal science—this treadmill is getting grimmer in the world’s wealthiest nation.

There is an answer to this dilemma: limit both market and state through policies that free people’s time. The economy should provide greater freedom for life, a freedom in part from overreaching markets.

A society with strong local economies and communities, with many activities provided by local nonprofits, a focus on local small businesses and banking, on farmers’ markets and urban gardens, on urban design that favors shared walks instead of isolated commutes, on public spaces for social interaction, and circumstances in which buyers know sellers, sellers donate and volunteer for local activities, salary differences are not vast, and citizens build a better world together, is the kind of society that makes for health, happiness, true prosperity, and sustainability. We know how to create such a society; what we need is the determination to keep the market, no matter how useful it is, within useful boundaries, and the political will to make change happen.

The Happiness Initiative

“Political will?” You say. “Suuure, good luck. The gridlocked, partisan, polarized, corrupt morass of American politics makes all these proposals, policies, and programs from chapter 1 to 13 practically impossible. Dream on.”

You have a point.

But despite bad politics and pervasive corruption throughout our nation’s history, progress has been made. No idea here is a silver bullet, but collectively, we think their pursuit can realign American politics and bring a fractured progressive movement into sufficient constructive harmony to actually see these ideas through to implementation and clear economic progress. Some Americans have vehemently opposed every step toward progress, whether it was the vote for women, civil rights, or protection of endangered species. This rancorous minority has lost when progressives unite.

Pursuing quality of life, or happiness, over GDP growth is bitterly criticized by economists on the Left and the Right, yet we find that Americans of all political perspectives like the idea. Above all, moving forward requires greater citizen involvement in the shaping of our democracy, laws, and future.

We believe the solutions to America’s economic problems are spread before us like puzzle pieces waiting for the support, leadership, effort, and skill to put them all together. It is stunning how much knowledge we actually have about dealing with everything from reduced infant mortality to effective education, reduced prison recidivism, renewable energy, lower carbon emissions, and a host of other problems.

We believe the catalyst for change in America is the economy. And economic transformation is the hub that turns progress and on a wide wheel of issues. A pragmatic economic vision for a better economy builds political momentum by bringing Americans together across issues, parties, and ideologies to enact a broad progressive agenda. While implementing solutions, we Americans need to be engaged in a process for setting out our goals for the economy (what we want from it) as opposed to the economy’s goals (what it demands from us). We Americans are constantly told that what we want is more economic growth. Yet in hundreds of discussions the two of us have had across the United States, Americans haven’t told us that they want more economic growth. They say they want more time with their families, they want health care, secure jobs, college for their kids, a healthy environment, and less debt. Most Americans are saying not that they want more stuff, but that they want a secure and happy life.

So we need a real national dialogue. Let’s ditch the pundits and talk with our neighbors. City by city, town by town, state by state, we deserve a national discussion of what Americans actually want out of the economy. Are our current economic goals, measures, policies, and institutions reflective of what Americans want? The two of us don’t think so.

Polling has a place, but most of it is superficial—your momentary position on this issue or politician, et cetera. The outcome of a real American dialogue would be different and far more valuable. (What if the only input to formulate the U.S. Constitution had been polls, rather than months of heated discussion? One shudders at the thought.) But is a national dialogue possible?

Iceland did it. And found it highly valuable. Shockingly, its politicians were out of touch with what people wanted! Our bet is that Americans can have a constructive national dialogue too.

Let’s start with assessing the well-being of citizens. A survey tool developed in Bhutan and now used in several other countries provides a good starting point. This process is not prescriptive. It does not start out by telling people what they need to do, and it does not ask them their position on “issues.” Instead, through a series of questions, it assesses their relative well-being in the nine happiness domains developed in Bhutan.

As part of the Happiness Initiative (www.sustainableseattle.org/sahi), Sustainable Seattle, the first organization in the world to establish regional indicators of well-being, has been using a shortened version of this survey tool. You can take that survey yourself at: www.sustainableseattle.org/sahi. You will find your individual scores for each domain, and you may think about what you can do to improve your scores where they are low. Sustainable Seattle plans to couple the subjective data from these surveys with objective measurements. For example, a score for self-reported health might be coupled with data on life expectancy, child mortality, or obesity.

Once the scores are made public, the question becomes: What kinds of economic policies are most likely to improve areas of concern without damaging others? If people are economically insecure and there is high unemployment, yet at the same time, levels of stress and “time poverty” are high, the best economic policy would not be the creation of more sixty-hour-a-week jobs; it would be policies that help increase the amount of reasonable income part-time work with benefits, so that work can be shared, creating both jobs and more leisure time. This would also benefit employers, since many studies show that overwork reduces productivity and endangers worker safety. Bhutan actually provides a good model. Investment did not stop while citizens filled out Gross National Happiness surveys and discussed policy. At the same time they built schools, clinics, and provided electricity to 80 percent of the population in just a few decades. In fact, the process of national dialogue and physically implementing economic solutions has proceeded simultaneously.

Toward Life, Liberty and Happiness

America can have a better economy in the twenty-first century, but it requires reallocating labor, technology, resources, and capital. There must be both private and public investment for research and implementation. For example, solving the Sustainability Paradox requires public and private investment, job creation, scaling back overconsumption, new technology, wiser uses of resources and time. Oil reserves are declining, while the climate is heating up. Displacing oil with conservation and renewable resources and reducing carbon dioxide emissions to eventually check climate change require the investment of trillions of dollars. Fortunately, the U.S. economy has trillions of investment dollars available. Much of it is currently rolling the dice of wealth redistribution without providing any actual goods or services. Bold action to regulate and tax speculation is needed. Policies that dramatically shift the incentives governing private capital investment toward solutions are also needed. Economic conversion requires public investment, and that will require higher taxes, particularly for the wealthiest Americans and corporations.

Every industrial process needs to be improved. American agriculture needs to be improved. Fortunately, the know-how for those improvements is at hand for every industry. We will have to forgo some profits and consumption for long-term investment and improvement, but achieving a better economy is well worth it.

The point is that there are many solutions out there, but getting to them requires answering the question: What is the economy for, anyway? It requires citizen engagement in assessing real well-being as a substitute for the failed gods of GDP and economic growth. It requires the physical transformation to a sustainable economy by shifting investment on a grand scale and creating new jobs.

Shouting “I’m number one” never made anyone number one. That takes paying attention to what works better in other countries and what’s not working well now in the United States. It’s time for a solidarity economy, one that recognizes we’re all in this together. We can learn from Europe and other parts of the world and from the “best policies” in our own American states. We can begin improving and redesigning markets to reflect real costs and to serve human needs. We can make personal changes as well, living more healthfully, simplifying our lifestyles so as to work less, pollute less, use fewer resources, and have more time for each other and our communities. You could call it capitalism with a human face.

What’s the economy for, anyway, if not life, liberty, and happiness? Together, we can organize our economy to secure the greatest good for the greatest number over the longest run. We can build a twenty-first-century economy and achieve a new American Dream.